ITAA's Year 2000 Outlook May 15, 1998 Volume 3, No. 19 Published by the Information Technology Association of America, Arlington, VA Bob Cohen, Editor bcohen@itaa.org Read in over 60 countries around the world ITAA's Year 2000 Outlook is sponsored in part by CACI International Inc., DMR Consulting Group Inc., and Y2Kplus, Inc. Senate Earmarks Y2K Funds In a Washington first, Senate Appropriations Chairman Sen. Ted Stevens (R-AK) has created an 'emergency Y2K computer problem' budget allocation for the newly created Special Committee on Year 2000, chaired by Sen. Bob Bennett (R-UT). Stevens is recommend ing a 'set aside' of $2.25 billion in budget authority and outlays for this unprecedented situation. The funds would likely be used to supplement the identified Y2K needs of the various infrastructure sectors, based on recommendations made by the Special Committee. In a statement released today, Sen. Bennett says, "We cannot wait another fiscal year before taking action. These funds will no doubt speed the process as we work to prepare the government for the impacts of the Millennium Bug." Federal Agencies Put Best Face on Y2K Efforts Optimism was the order of the day at a Y2K session this week featuring program managers from the Department of Defense and Federal Aviation Administration. Newly appointed DoD Y2K Special Assistant William Curtis and FAA Y2K Program Office Deputy Directo r Mary Powers-King faced an industry audience and expressed confidence that their agencies would be ready for the century rollover--without additional funding or outside help. Curtis and Powers-King were part of a session put on by Federal Sources, a McLean, VA-based market research firm. Also included on the panel were Joel Willemssen of the Government Accounting Office and ITAA President Harris Miller. Federal Sources' John Kost, former CIO of the state of Michigan, anchored the proceedings, using a format which avoided formal presentations and featured a series of questions to participants. Willemssen and Miller did not appear to share the confidence expressed by their fe llow panelists. Carefully measured in his responses, Willemssen, for instance, said he is "disappointed by progress to date" and not encouraged about the government’s prospects for the future. Acknowledging most of the criticisms in a GAO report, Curtis said DoD is poised to have its 2800 mission critical systems staged for release by December. He said thousand of people are working on the renovation and his goal is to allow the entire year of 1999 for mission and functional testing. Special emphasis, he said, is being paid by the Joint Chiefs of Staff to DoD's top 20 war fighting systems. Asked for a worst case scenario, Curtis said he couldn't see one. Powers-King suggested that the FAA Y2K conversion is also on schedule after a rough take-off. She said the agency will have its renovation completed by June 1998, testing by March 1999 and implementation by June 1999. Powers-King said the FAA will be ab le to conduct this work using its own employees and incumbent contractors. Asked whether he agreed with King's sunny assessment, Willemssen admitted that the GAO has not recently reviewed the FAA Y2K program. Asked how he knows that DoD status information is accurate, Curtis said he had only been on the job a little more than a month. He said, however, that some service branches have auditors in the field and require two signatures to certify that programs ar e fixed. Powers-King said FAA has turned to Coopers & Lybrand to provide this type of watchful eye. An agency not known for flying high in terms of program management, Powers-King said the FAA is also utilizing an independent verification and validation contractor as well as in-house inspector general staff to help assure that the Y2K program stays on course. Much of the discussion focused on whether the government is expending adequate resources to get its Year 2000 house in order. ITAA's Harris Miller maintained that Uncle Sam needs to pump more money into the federal marketplace. He said many federal contr actors have increased their internal capacity to help federal agencies deal with the date change issue, only to see this business fail to materialize. That's not because the work is getting done, he indicated; rather, he said the market has been held cap tive to the test of fiscal nerves being played out by Congress and the federal agencies. With federal Y2K efforts on pause, Miller said many firms are looking elsewhere to provide Y2K services, including Canada. There, he said, a recently awarded, $1 bi llion federal government Y2K contract is paying commercial rates to contractors to perform this work. Low labor rates sought by the U.S. government, as well as warranty clauses which may place an unacceptable level of risk on federal contractors, may be cau DoD's William Curtis appeared to reject the notion that more money is the answer. He said the promise of a "huge pot of money" would actually stop progress, with components holding off on making fixes until the anticipated dollars arrive. Hill Briefing Defines Up Hill Battle on Embedded Bugs A special briefing this week for Capitol Hill staffers pointed out the steep hill government and industry alike must climb to scale the Y2K embedded systems issue. In a session set up by ITAA and the House & Senate IT Congressional Working Groups, Cara C orporation Embedded Systems Specialist David C. Hall told a group more accustomed to bills than bugs that the world must fix in 18 months systems which have taken 40 years to develop. Hall said that there are over 40 billion microprocessors worldwide, an d anywhere from one to ten percent may be impacted by the date change. Embedded systems process information, monitor and control system functions and are integrated into everything from bank vaults to bottling plants. Hall said that embedded system failures will cause one of three outcomes: systems will shutdown, produce large, observable errors or small, less noticeable errors. He said 80 percent of the total Y2K effort may be expended fixing automated control and e mbedded systems, a result of the fact that these resources require greater personal attention and are more difficult to find than traditional information systems. In the PC realm, Hall talked about one study indicating that 93 percent of pre-1997 BIOS ch ips failed a Y2K compliance test. He said 47 percent of last year’s BIOS flunked too. In demonstrating the ripple effect that the problem is already having, Hall described an oil company that has determined the need to replace thousands of chips controlling an oil dispensation system. The chips, he said, do not fit on the existing motherb oards and that new motherboards do not fit into existing valves. As a result, the valves themselves will have to be replaced, Hall said. He added that while engineers traditionally design in terms of single point failures, Year 2000 is forcing people to think in terms of single design failures. Hall claimed that no plant or factory tested to date has been found free of all Y2K related problems. Also speaking at the event was Arthur Thomas, a Merrill Lynch senior vice president and the Securities Industry Association’s point man on street wide testing. He said Merrill Lynch will spend over $275 million for Y2K fixes and that the securities indus try will spend an estimated $4- to $6 billion. He said that the SIA will perform a street wide beta test next month with 25 broker/dealers and financial institutions. A process he called enormously complex, the test will allow the industry to recreate t he trading cycle and understand what impact, if any, the Year 2000 will have on the ability of securities firms to flow a transaction through the multi-party system. He called the beta a "test of a test." The full street wide test is scheduled for March 1999. Hill Hearing Finds Low Energy Response to Y2K A Year 2000 hearing on Capitol Hill this week showed an energy industry with fragmented oversight and, in some cases, industry Y2K programs just getting off the ground. The House Technology Subcommittee conducted the hearing, which featured speakers from government and industry. Although Chairwoman Connie Morella (R-MD) opened the session by noting that "if power shuts down, the rest of our society will shut down in its wake," some of the testimony seemed to indicate that an industry wake up call may st ill be needed. Kathleen Hirning, CIO at the Federal Energy Regulatory Comission (FERC), said the magnitude of the Y2K problem on regulated energy industries is not yet known. Hirning’s testimony pointed out the difficulty that the federal government has in exerting reg ulatory control in a cross-cutting situation like the Year 2000. Hirning called it an unusual problem for her agency because, she said, "the Commission does not exercise direct authority over internal operations of the regulated companies’ businesses as a general matter." She said FERC has regulatory authority over the ability of regulated utilities to recover their Y2K related costs, but not over the measures taken by the utilities to fix the problem. She also said FERC’s authority does not take in th e full spectrum of energy companies. "Large portions of these industries are subject to the authority of other federal agencies or state and local governments, or are self-regulated or unregulated." Hirning indicated that while the power may be flowing, good information about the extent of the problem within the industry is not. "Thus far," she said, "available information is anecdotal, with very little empirical data on completion of conversion tas ks and structured testing." She said the amount of Y2K work completed in the industry is largely unknown and compilation of the information has been inadequate. Embedded systems are a particular concern. "One electric power plant alone may have thousands of embedded systems," Hirning said, adding, "Without testing, the potential impact of Year 2000 errors could cause some embedded systems to malfunction, possibl y resulting in a ripple effect across a portion of the grid." She said that grid control is decentralized. Utilities coordinate their interconnection activities through the North American Electric Reliability Council (NERC) which, only this month, decided to poll its members to determine the likelihood of Y2K probl ems. Hirning painted an equally troubling picture for the oil and gas industries, with embedded systems present in all sectors and numerous power generation, transmission and distribution activities. Offshore oil platforms, for instance, may have 10,000 or more embedded chips, many below the surface. "Unlike the electric industry," Hirning said, "the oil and gas industries are fragmented, and do not have regional councils or control areas." Hirning said the agency’s own outreach efforts are in the exploratory stage. She listed a set of awareness related activities in the pipeline, including publications and seminars. If FERC determines that the Y2K problem is not being adequately addressed by industry segments, "more direct measures" may be necessary. She failed to say what those measures might be. Nuclear Regulatory Commission (NRC) Deputy Executive Director for Regulatory Programs Hugh Thompson described a more mature Y2K program. This week, the agency sent a "Generic Letter" to all nuclear power plant licensees seeking a written response as to h ow they are addressing their Y2K problems. The letter points to guidance from the Nuclear Energy Institute as an acceptable approach to the issue. Responses are due in mid August. Thompson said that nuclear power plants are also required to submit a wr itten response no late than July 1, 1999 confirming their Y2K readiness. Thompson also said the NRC will begin to sample plant preparedness with onsite inspections. He noted that the agency focuses on public health and safety issues related to reactor o perations; regulatory oversight and authority does not extend to the offsite electrical grid system. NRC, he said, is working with the energy subcommittee established by the President’s Council on the Year 2000 to share information and provide assistance . Texas Public Utility Commission Executive Director John Laakso said a recent survey shows that the seven investor-owned electric companies serving 85 percent of the state’s citizens have Y2K budgets greater than $300,000 and have assigned an average of 30 employees to the problem. The survey indicates that three of these firms have completed 30 percent or more of their conversion activity and four are less than 30 percent done. Laakso said that despite the "rosy" picture painted by the survey, given the scope of work, interconnect and supplier readiness issues, "there is still a potential minefield of unknowns. Y2K experience from other industries has shown that even though a vendor may report or claim that its equipment or systems are compliant, no un iversal testing or verification process has been established that can ensure standards or acceptance criteria which confirm satisfactory performance in a given application." Industry consultant Rick Cowles also appeared before the Subcommittee. According to Cowles, a recent Year 2000 panel session at the American Power Conference in Chicago drew just nine people, four of which were speakers. A Y2K meeting conducted this mon th by the Electric Power Research Institute, Cowles said, drew 70 companies. "…there are 7,819 individual companies in the U.S. that generate and/or distribute electricity," he noted, adding that these turnout numbers make it difficult to believe the ene rgy industry is pooling information on the issue. Certain sectors, he said, appear to view the century rollover situation in competitive terms. Intuit Tagged Again Intuit Inc. has been hit with a Y2K-related class action suit for the second month in a row. Filed in New York State Supreme Court by Bernstein Litowitz Berger & Grossmann, the suit alleges that the company sold versions of its Quicken financial software programs that are unable to process dates after December 31, 1999. The suit further alleges that Quicken customers were not warned that the online banking functions of Quicken Versions 5 and 6 could not process dates and that the software publisher fail ed to offer a free software fix. A statement released today by Intuit says the company is committed to meeting its customers’ needs and believes the suit is without merit. World Bank Set to Issue Y2K Grant Rules The World Bank’s infoDev program is set to issue grants to national governments grappling with the Year 2000 problem. InfoDev will post the rules for making grant applications on its web site (http://www.worldbank.org/infodev/) next week. British Prime Minister Tony Blair recently announced a $16.7 million grant to support the program, which seeks to help the least developed countries deal with the Y2K situation. InfoDev Program Manager Carlos Primo Braga said the grants will fall into two categories. The program will provide $100,000 grants to assist countries in designing or improving Year 2000 programs and $500,000 grants to countries for systems remediation. Braga says the Year 2000 is a good news/bad news issue in the developing world. He said that these countries are not as information systems dependent as industrialized nations, but also have much less awareness about the situation and have older systems to fix. He said the situation is different on a country by country basis. Braga also said that the World Bank will be launching a series of 20 conferences between now and September focused on the political and social risks of the Year 2000. Closer to Home Veronex Technologies, Inc., based in Santa Ana, California, has received ITAA*2000 certification. ITAA*2000 is the industry’s century date change certification program. The program examines processes and methods used by companies to perform their Year 2 000 software conversions. Veronex participated in a rigorous evaluation of its approach to date conversion, with extensive analysis in eleven discrete process areas deemed necessary to a successful Year 2000 conversion. Business to Business R Systems, Inc., Sacramento, CA, has won a Y2K consulting contract with the California Department of Forestry and Fire Protection. Accelr8 Technology Corporation, Denver, CO, has entered into Y2K licensing agreements with Harris Publishing and Retired Persons. CTA Incorporated, Rockville, MD, has been awarded a Y2K testing contract by Wells Fargo. The Society for Information Management (SIM), Chicago, IL, has announced the publication and availability of Year 2000 Update: Key Issues and Research Reports. Viasoft, Inc., Phoenix, AZ, has entered into a strategic partnership with Computer Horizons. GRC International, Vienna, VA, has been awarded a Y2K contract by The George Washington University. Peritus Software Services, Inc., Billerica, MA, has entered into a licensing agreement with Raffles Software. Sponsor Advertising CACI International Inc. -- Restore 2000 CACI leverages 35 years of information technology experience and over 10 years of reengineering systems - solving the same problems Y2K poses - to offer a total solution to the Year 2000 challenge: Restore 2000SM. The Restore 2000 methodology applies a comprehensive three-phase process to your information systems: Assess, Plan, and Remediate. Furthermore, we give you the option of buying our methodology or our services - both backed by CACI experience and Y2K expe rts. The Restore 2000 methodology is ITAA*2000 certified. In addition, software development processes at CACI have been independently certified as being at Level 3 of the Software Engineering Institute (SEI) Capability Maturity Model. Achieving SEI Level 3 p rovides clients further assurance that CACI solutions successfully and effectively deliver Year 2000 compliance while allowing you to save money, reduce risk, and minimize systems disruption. With approximately 3700 employees worldwide and FY97 revenues in excess of $270 million, CACI provides a depth of experience and expertise you can rely on. We've performed Year 2000 conversions for many of America's biggest enterprises, including major he alth insurance providers, retail clothing manufactures, gas companies, airlines, and government agencies. Superior functionality backed by decades of experience - CACI's Restore 2000. Worldwide Headquarters 1100 North Glebe Rd. Arlington, VA 22201 http://www.caci.com e-mail:npeters@hq.caci.com DMR Consulting Group Inc. DMR Consulting Group Inc.(formerly DMR TRECOM), an Amdahl company, is a global consulting organization of nearly 8,000 employees providing a comprehensive range of information technology services. Our Year 2000 Practice comprises a comprehensive offering of consulting, assessment, remediation, testing, and implementation services utilizing a formal methodology (APM/2000), best-in-class software tools, and six global conversion centers. We have mul ti-disciplinary experience in most mainframe, mid-range, and client-server/desktop environments. APM/2000 includes: · Program Management · Enterprise-Wide Assessment · Impact Analysis · Conversion Delivery · Testing and Implementation Year 2000 Risk Management Consulting Services include: Program Review, Stakeholder Readiness Assessment, Risk Management and Vendor Compliance Research. Contact: Stephen Frycki Managing Director, Year 2000 Services - US Phone: 201-200-3923 Fax: 201-200-9046 Email: fryckis@dmr.com Websites: http://www.dmr.com Y2Kplus, Inc. Y2Kplus provides a portfolio of "best of class" software products and outsourcing services that address Year 2000 issues. These offerings are available both to IT Solution Providers and IT organizations. Y2Kplus has offerings that address the following needs: Our offerings include: * Year 2000 risk assessment * Mainframe inventory verification & code remediation (COBOL, Natural, Assembler & PL/1) * Midrange COBOL remediation (DEC, HP, UNISYS, Wang, DG, NCR, Bull & Tandem) * AS/400 remediation (RPG & COBOL) * Networked PC Year 2000 Analysis tools Applications: Access, Excel, Foxpro, Lotus 1-2-3 Languages: Basic, Visual Basic, C, C++, dBase, Clipper, Paradox PC Hardware, BIOS & Operating Systems * Testing: Tools: Data Commander for future date testing, TCS (Test Control System), Services: Test management & execution, Facilitated Test Planning, Test strategy. For more information, please send email to info@y2kplus.com, visit our web site at www.y2kplus.com or call Dave Ehlke at 781-863-8111. Calendar http://www.itaa.org/y2kcal.htm ITAA's Year 2000 Outlook is published every Friday to help all organizations deal more effectively with the Year 2000 software conversion. If you would like to receive this free publication, please sign up on the web at https://www.itaa.org/transact/2kout looksub.htm. Copyright ITAA 1998. All rights reserved. The Information Technology Association of America, 1616 N. Fort Myer Drive, Suite 1300, Arlington, VA 22209. Internet: http:\\www.itaa.org